Global footwear giants shift sourcing from China to Vietnam
Updated at Sunday, 13 May 2018, 16:00
The Hanoitimes - More world leading footwear manufacturers are expecting to shift their sourcing from China to Vietnam as the first’s footwear industry might face risks of high tariff imposed by the US.
At the annual general meeting of shareholders held recently, Adidas’s chief executive Kasper Rorsted expected a shift in its sourcing of footwear from China to Vietnam to continue although he shrugged off concerns about the possible imposition of US tariffs on Chinese-made shoes, Reuters reported.
Factories in Vietnam produced 44 percent of Adidas footwear volume in 2017, up from 31 percent in 2012, while Chinese suppliers made 19 percent, down from more than 30 percent in 2012, Rorsted said.
There was a wave of shifting footwear factories from China to Vietnam.
“I’m not going to rule out that this trend is going to continue,” he said, adding: “China is still an important procurement market, irrespective of trade duties.”
Rorsted noted that there was still a lot of uncertainty over what sectors could face new US tariffs. “We might be hit by import duties but it will also apply to our competitors.”
German shoe manufacturer Puma, which makes about a third of its products in China, also said last month that it is working on contingency plans to move some production from China to other Asian markets if US tariffs are imposed.
A report from Bloomberg released in March suggested that US President Donald Trump is considering a new set of measures targeting China. The proposed duties are intended to punish China for intellectual property abuses and could affect a range of industries — including footwear, which imports about 72 percent of its products from China.
Four years ago, many world leading footwear makers also moved their orders from factories in China and Bangladesh to Vietnam.
According to the Vietnam Leather, Footwear and Handbag Association (Lefaso), Vietnam enjoyed a new wave of orders from Nike, Adidas and Puma in the first half of 2014, when its localization ratio rose 25 percent compared to the same period of the previous year. Lefaso said that these footwear giants were facing soaring labor wages, pollution, and other issues in China, prompting them to move their orders to other countries, including Vietnam.
As for Vietnam’s footwear exports this year, Lefaso forecast that positive signs in the world’s economy and increasing consumption demand would help footwear remain the country’s top four foreign currency earner. The industry’s export turnover this year is set to rise 10 percent against last year to US$20 billion.
To help Vietnamese exporters meet the targets, the association will actively participate in relevant policy making while luring foreign and domestic investment in support industry, thus increasing the localization rate and ensuring sustainable development.
Besides hosting trade promotion events and workshops as well as taking part in international expos, the association will also hold training courses to improve the management capability of firms as a dramatic change in market trends and the industrial revolution 4.0 are forcing local firms to gradually apply new technologies in production.
According to experts, while the labor productivity of domestic enterprises is only four to six pairs of shoes per person per day, those of foreign-invested enterprises reached 16-18 pairs a day last year and is expected to increase to 20 pairs this year.
The experts said that this difference has cost domestic enterprises big losses compared to foreign enterprises in terms of export turnover and added value. Modern management methods and technology will solve the problem of labor productivity and the growth of the footwear industry, she said, adding that this investment required a lot of capital, but it would improve productivity and improve product quality.